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Will alimony payments go down after tax reform?

After the end of the marriage, some individuals will need to rely on temporary financial aid from their previous partner. Due to certain marital circumstances, some individuals receive alimony payments, but a new tax reform bill could jeopardize the security of alimony payees and recipients alike, experts say. In Florida, it may take careful consideration to determine which spousal support options are the best fit for one's interests. 

It can be a financial pain to make support payments, but under current law, payees are able to deduct the amount of alimony when paying income tax. The recipient of the payment must then claim the money as income and pay tax, although typically in a lower tax bracket. The proposed tax reform bill would eliminate the tax deduction and create consequences for future agreements. 

If a payee would not be allowed to deduct the alimony, his or her income would tax a greater hit, leaving less funds available overall. This would likely create a situation in which the payee would want to reduce the amount of support paid to the ex-spouse. An ex-spouse may then find him- or herself struggling financially after the divorce. 

It isn't yet clear whether the reform bill will pass, but some lawyers are rushing to close divorce cases ahead of any changes. After 2017, the rules of the game may well change. In Florida, it can be important for an individual to have the most up-to-date information about the tax impacts of alimony. Many people choose to use the services of an attorney to guide them through the process.

Source: Reuters, "Is tax reform the final straw for alimony?", Beth Pinsker, Nov. 9, 2017

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